General Motors Making Larger Investments in Green Ethanol

General Motors Corp. has taken an undisclosed equity stake in a second cellulosic ethanol research firm, boosting the Detroit automaker's plans to jumpstart the production of renewable fuels. GM's new venture is with Boston based Mascoma Corp., which plans to build a refinery in Michigan. The investment was announced by GM President Fritz Henderson on Thursday at a Washington news conference.

The news follows GM's announcement in January that it had invested in Illinois-based Coskata, another cellulosic ethanol company, as part of the company's effort to speed the development of biofuels made from renewable resources such as switchgrass, paper waste, woodchips and corn stalks. In July, Gov. Jennifer Granholm announced that Mascoma would build a plant in Michigan. The location will be announced in the next month or two, Mascoma CEO Bruce Jamerson said. The plant isn't likely to begin producing significant quantities of ethanol until 2010, he added.

"This is absolutely critical to our future," Henderson said of the Mascoma venture, noting it was a "small investment" compared to a product launch. "It is in our economic self-interest for these companies to succeed."

Henderson said ethanol is the only nearterm solution to dramatically reducing oil usage in the United States and that flex-fuel vehicles, which can run on a mixture of 85 percent ethanol and 15 percent gasoline or regular gasoline mixtures, are a viable solution. There are 7 million flex-fuel vehicles currently on the road, 3 million of which are GM products. The Detroit automaker has promised to make half of its vehicles capable of running on E85 by 2012. Automakers get credits toward meeting fuel economy requirements for making flexfuel vehicles .

Jamerson said Mascoma hopes to produce at least 200,000 gallons of cellulosic ethanol annually starting in 2009 from renewable resources at a production cost of between $1 and $1.50 a gallon. That would make it price competitive with gasoline. The company has a demonstration refinery under construction in Rome, N.Y., that will begin producing switchgrass ethanol before year's end and another planned for construction in Tennessee.

Jamerson said 3 yr old Mascoma uses a special type of yeast to break down waste material and turn it into ethanol. Jamerson said the raw material cost of producing cellulosic ethanol will be about $50 a ton, which translates in energy content to $17 a-barrel oil equivalent, a fraction of the current price of oil. Mascoma has about 100 employees, including 35 Ph.D. scientists.

By 2010, Mascoma hopes to ramp up its production to more than 1 million gallons of cellulosic ethanol a year. No cellulosic ethanol is commercially produced worldwide today, but Congress has mandated that the United States use 16 billion gallons of cellulosic ethanol by 2022. Steven Pueppke, director of the Office of Biobased Technologies at Michigan State University, said the GM announcement "is a validation of the Mascoma model. It ties them even closer to Michigan and bodes well for the state."

Pueppke said cellulosic ethanol plays to Michigan's strengths, in part because the state has so much cellulose, or plant material, such as woodchips and corn cobs. Moving to cellulosic ethanol "neutralizes the fuel-vs.-food controversy that's been so much in the news," Pueppke said. "It's clearly a long-term strategic solution that plays to Michigan's strengths."